SIE EXAM 2024-2025 Questions &
Answers 100% Correct!!
Federal Reserve Board - ANSWERFounded on December 23rd 1913, to oversee financial panics.
Independent of direct political influence. Federal Reserve Act was passed to stabilize prices,
maximize employment, moderate long term interest.
FINRA vs MSRB - ANSWERFINRA oversees brokerage firms and their associated persons.
MSRB- regulates the municipal securities market including dealers, municipal advisers, and issuers.
Municipal Securities Rulemaking Board
Structure of the Fed - ANSWERThe Board of Governors/The Federal Open Market Commitee/ Twelve
Regional Federal Reserve Banks/Member banks throughout the United States. Made up of the
Federal Reserve Board FRB which is appointed by the US president and 12 regional Federal Reserve
Banks which supervise private commercial banks.
FOMC (Federal Open Market Committee) - ANSWERa body that consists of the seven members of the
board of governors and the twelve presidents of the regional Federal Reserve Banks. Not all of the
twelve presidents have a vote at any given time.
Department of the Treasury - ANSWERCollects, borrows, spends, and prints money
Roles and Responsibilities of the FED - ANSWERStrengthening the US standing in the World
Economy/ Maintaining a balance between the private interests of banks and the centralized
responsibilities of the government, including supervising and protecting the credit rights of
consumers/ ensuring the financial system's stability and mitigating systemic risk within the financial
markets.
Federal Deposit Insurance Corporation (FDIC) - ANSWERan agency created in 1933 to insure
individuals' bank accounts, protecting people against losses due to bank failures. Extends to checking
and saving accounts, money market accounts, Certificates of Deposit, and IRAs but not annuities,
mutual funds, life insurance policies, bonds or stocks. Covers up to 250,000 dollars per individual.
State (Blue-Sky) Regulation - ANSWEREstablished under the Uniform Securities Act (USA) - Each state
has the authority to impose additional requirements for both issuers and financial intermediaries.
Requires that private investment funds register in their home state and every state where they
conduct business.
North American Securities Administrators Association (NASAA) - ANSWEREstablished in 1919 in
Kansas, 67 securities administrators from all over North America are responsible for licensing
securities firms, investment professionals, and other tasks. Protects clients who seek investment
advice or deal with securities such as a small business who wants to review financial offerings .
Securities Act of 1933 - ANSWERThe first major law regarding the sale of securities. It required that
companies register their securities sold to the public with the SEC and that investment bankers must
provide full and accurate information related to new securities issues to potential investors.
Stipulates that companies must provide a description of the security being offered, description of the
,company's business and properties, and Financial statements that have been certified by
independent accountants.
Securities Exchange Act of 1934 - ANSWERAn act that regulates the trading of securities such as
stocks and bonds in the secondary market. Purpose was to promote financial transparency and
accuracy while reducing the incidence of fraud and market manipulation. Established the SEC led by
five commissioners appointed by the president. These five are split into divisions including division of
trading and markets, investment management, corporation finance, enforcement, economic and risk
analysis.
Investment Advisers Act of 1940 - ANSWERLegislation governing who must register with the SEC as
an investment adviser. Prohibits advisers from engaging in front-running and churning practices.
Entities that are excluded are Banks and bank holding companies, Lawyers, accountants, engineers,
and teachers, Brokers and dealers, Publishers, Government securities advisers, credit rating agencies,
family offices.
Securities Investors Protection Act (SIPA) - ANSWERNon-profit organization established by Congress
to safeguard the customers of brokerage firms that become insolvent by utilizing multiple bodies
including the SEC, self-regulating organizations, and the securities investor protection corporation
(SIPC).
SIPC Coverage - ANSWER$500,000 per customer of which no more than $250,000 in cash per
account. (only the equity in margin accounts, not the full market value). Some examples include Joint
Accounts, Corporate accounts, Individual accounts, Trust Accounts, Roth IRAs and Traditional IRAs,
Accounts held by a legal guardian or estate executor.
Penny Stock Reform Act of 1990 - ANSWERregulates the solicited sales of certain low-priced
securities to potential new customers. A penny stock is a stock that trades below 5$ a share or stocks
that don't meet the NYSE official listing standards.
Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA) - ANSWERThe act aims to
increase the liability penalties to all involved parties for insider trading.
The Investment Company Act of 1940 - ANSWERIts chief aim is to safeguard investors by making
them aware of the risks of purchasing and holding securities.
Telephone Consumer Protection Act of 1991 - ANSWERA federal law that places restrictions on
telephone solicitation of business.
Financial Industry Regulatory Authority (FINRA) - ANSWERa self-regulatory organization and the
largest non-governmental regulator of securities firms in the US; registers and provides qualification
exams to industry professionals, writes rules for trading, educates the investing public, provides
trade reporting, resolves disputes between customers and firms
Important FINRA rules - ANSWERRule 2266 - SIPC Info, this rule requires SIPC member firms to
provide written notice to customers about SIPC protections.
Rule 2269- Disclosure of Participation or Interest in Primary or Secondary Distribution, rule requires
firm to disclose any participation or interest in a primary or secondary distribution of securities to
customers.
Rule 5250- Payments for Market Making, prohibits firms from accepting payments from issuers or
promoters.
, Uniform Practice Code (UPC) - ANSWERIt standardizes practices, customs, trading techniques, and
operational and settlement issues as much as possible. Such as Trade terms, payment and delivery,
dividend and interest payments, reclamations, exchange of confirmations.
Code of Procedure (COP) - ANSWERFINRA's formal procedure for handling trade practice complaints
involving violations of the Conduct Rules. The Department of Enforcement is the first body to hear
and judge complaints.
Municipal Securities Rulemaking Board (MSRB) - ANSWERA self-regulatory organization that
regulates the issuance and trading of municipal securities. The Board functions under the Securities
and Exchange Commission's supervision; it has no enforcement powers. Related item(s): Securities
Acts Amendments of 1975.
Chicago Board Options Exchange (CBOE) - ANSWERregulates all matters related to trading
standardized options and related contracts listed on that exchange. Does not trade US and European
Stocks or International exchange products directly.
Investors - ANSWERCan Invest in mutual funds, bonds, stocks, ETFs, foreign exchange, precious
metals like silver and gold, and real estate.
Venture Capitalists - ANSWERinvest in start-ups and small businesses. Seek an equity stake in return
for their investment and help grow the company
Angel Capitalists - ANSWERProvide capital to entrepreneurs and start-ups when the risk is high, i.e.,
in the early stages
Institutional Investors - ANSWERLarge organizations - such as pension funds, mutual funds, and
insurance companies - that invest their own funds or the funds of others
Personal Investors - ANSWERinvest their own capital in stocks, bonds, mutual funds and Etfs, seeking
higher returns than traditional savings accounts or CDs. NOT PROFESSIONAL INVESTORS
Broker - ANSWERA broker carries out orders for clients. They help investors buy and sell securities.
Dealers - ANSWERMarket intermediaries that always stand ready to buy from sellers at the bid (low)
price and sell to buyers at the ask (high) price, thus taking the bid-ask spread as the per-unit profit.
Examples of Broker-Dealers include but not limited to E-Trade, TD Ameritrade, and Charles Schwab.
Investment Advisors - ANSWERperson/group making investment recommendations or doing security
analysis for fee thru direct management of assets or written publications
Municipal Advisor - ANSWERperson or firm that provides advice on behalf of a municipal entity or
official with respect to municipal financial products or issuing municipal securities
Primary Roles of Municipal Advisers - ANSWERMarketing of Bonds- Creating suitable offering
documents for the type of issuance and providing support with a bond rating.
Approach for Sale- Assisting the issuer in determining, the transaction's optimal sales method and
selecting underwriters.
Project Feasibility- Creating financing alternatives for the issuer's assessment, considering present
and future capital requirements,
Selling of a Bond- Compiling information and evaluating bond conditions on comparable bonds to
assist in pricing.
